Spotify moving into Warfield building

Swedish firm Spotify, which streams music globally, will occupy three floors in the Warfield building.

Photo: Paul Chinn, The Chronicle

Here's a musical match that makes sense: Spotify and the Warfield.

The fast-growing Swedish music streaming company is moving into the Warfield building on San Francisco's Market Street, where it will take up three floors and 13,500 square feet above the famed rock concert venue.

"Spotify is both a technology and a music company, so the Central Market location and association with the Warfield theater were a perfect fit for us," said Spotify's vice president of strategic partnerships, Tom Hsieh.

The company, which streams music in more than two dozen countries and has 800 employees worldwide, is looking to move out of smaller co-working space on Fremont Street, South of Market, and into the Warfield building by mid-July.

The new location will enable the San Francisco head count to "aggressively grow," primarily with software engineers and product managers. "We want to make it our tech hub for Silicon Valley," Hsieh said.

Founded in 2008, Spotify counts 24 million "active users" and more than 6 million ad-free subscribers, paying $5 to $10 a month. The private company would not disclose finances but was reported to have lost $57 million on approximately $236 million in revenue in 2011, with revenue reported to have doubled in 2012.

With Spotify valued at around $3 billion, investors include Coca-Cola, Goldman Sachs, Menlo Park's Kleiner Perkins Caufield & Byers and Russia's DST Global, founded by billionaire Yuri Milner, who also has a major stake in Facebook.

One of Spotify's soon-to-be neighbors is Benchmark Capital, the Silicon Valley VC firm that leased two floors and 10,000 square feet at the Warfield last year. That brought Benchmark closer to one of its major investments, Twitter, in the same payroll tax exemption area of Mid-Market encompassing the Warfield.

More the merrier: Mayor Ed Lee is announcing three other lease-signings in the Mid-Market area Wednesday.

Apex, otherwise known as Ricardo Richey, a San Francisco street artist whose spray-paint abstracts are featured in museums around the world, is moving into a co-working space at 42 Turk St., in the Tenderloin, along with Holy Stitch Denim Social Club, "an off-the-grid powered manufacturing center" - primarily of jeans - "that triples as a school and community center."

The art studio/boutique space is part of a building owned by the Tenderloin Neighborhood Development Center.

Last but not least is the heretofore unknown Phantom Coast Gastropub and Brewery, which is taking up 5,000 square feet on Turk and Taylor streets and involve the rehabbing of four storefronts. It will also add 20 new jobs.

Lee said he is pleased that Spotify is "being joined by vibrant new small businesses and arts establishments that will be our long-term partners as we revitalize the central Market and Tenderloin."

Rock 'n' roll! Two Bay Area real estate investment firms must be pretty happy as well.

Group I, which has a portfolio of properties in San Francisco, bought the office and retail part of the Warfield building, price not disclosed, in April 2012, from San Francisco entrepreneur David Addington.

Benchmark Capital signed its lease there the next month. Add Benchmark's space to Spotify's, and Group I has rented out more than half of its 36,000 square feet there to new tenants in just over a year.

"We're thrilled to have Spotify as an anchor tenant at the Warfield," said the firm's managing director, Steve Kulkin. "They're a key partner in the revival of the Warfield and a strong proponent of Mid-Market as a technology hub." Cuklin said the building has just one office floor and a small retail space available for rent.

Three months ago, Sonoma County's A&C Ventures bought the actual theater from Addington, price also undisclosed but reportedly close to $6.5 million. Now having a hip online music service in the same building certainly can't be bad for business.

Addington bought the entire building for $10.5 million in 2005. His company, Fair Market Properties, filed for Chapter 11 in January 2012. He is still co-owner, however, of the gourmet sausage eatery Show Dogs at Market and Sixth streets.